Royalties estimates in the Western Australian state budget have fallen well short of the mark due to the unexpectedly low price of iron ore this year.
Government estimates costed the budget assumed the average price of the commodity would be US$122.70 for the year, however the price has plummeted almost to US$90 per tonne.
According to the West Australian, every dollar less on the price of iron ore costs state coffers $49 million in mining royalties revenue for the year.
Premier Colin Barnett has said that larger production volumes will offset these financial shortfalls, but treasurer Mike Nahan does not share the leader’s open optimism.
“Clearly it’s an issue… I look at the price every day and it’s something that we’re going to have to address,” he said.
Nahan has refused to rule out the prospect of increased taxes or spending cuts.
Image: West Australian